2019 (5) TMI 337 - AT - Income Tax

Allowability of deduction claimed u/s 80IB - income generated from scrap sales - HELD THAT - As in assessee s own case in assessment year 2009 10 2016 (2) TMI 1230 - ITAT MUMBAI has allowed assessee s claim of deduction. Following the aforesaid decision of the Tribunal, Commissioner (Appeals) has also allowed assessee s claim of deduction under section 80IB in respect of scrap sales in assessment year 2010 11. Facts being identical, respectfully following the decision of the Co ordinate Bench as referred to above, we uphold the decision of the Commissioner (Appeals) in allowing assessee s claim of deduction under section 80IB in respect of scrap sales in both the assessment years under appeal. Determination of arm's length price of corporate guarantee fee - Commissioner (Appeals) in restricting the arm's length price of corporate guarantee fee @ 0.5% - HELD THAT - Commissioner (Appeals) in restricting the arm's length price of corporate guarantee fee @ 0.5% is in consonance with the decision of the Hon'ble Jurisdictional High Court in Everest Kento Cylinders Ltd. 2012 (11) TMI 1099 - ITAT MUMBAI . In various other decisions also, different Benches of the Tribunal following the aforesaid decision of the Hon'ble Jurisdictional High Court have directed the Assessing Officer to determine the arm's length price of corporate guarantee commission @ 0.5%. That being the case, we uphold the decision of the learned Commissioner (Appeals) on the issue. Grounds raised are dismissed in both the appeals.

Summary

Issues:
1. Allowability of deduction under section 80IB of the Income-tax Act, 1961 for assessment years 2012-13 and 2011-12.
2. Determination of arm's length price of corporate guarantee fee.

Analysis:

Issue 1: Allowability of deduction under section 80IB:
The appeals were filed by the Revenue challenging two orders passed by the Commissioner (Appeals) related to the deduction claimed under section 80IB of the Income-tax Act. The Assessing Officer disallowed the deduction in both assessment years due to including income from scrap sales. However, the Commissioner (Appeals) allowed the deduction based on previous Tribunal decisions favoring the assessee. The Tribunal upheld the Commissioner's decision citing identical facts and previous rulings in favor of the assessee.

Issue 2: Determination of arm's length price of corporate guarantee fee:
The Assessing Officer made adjustments for corporate guarantee fees charged by the assessee's AE, leading to significant additions to the assessee's income. The Transfer Pricing Officer determined the guarantee commission rates, resulting in adjustments for both assessment years. The Commissioner (Appeals) directed the Assessing Officer to consider the arm's length price of the corporate guarantee commission at 0.5% per annum based on precedent rulings and decisions of the Tribunal and High Court. The Tribunal upheld this decision, emphasizing the reasonableness of the 0.5% rate in line with judicial precedents.

In conclusion, the Tribunal dismissed the appeals, affirming the allowance of deduction under section 80IB and the determination of the arm's length price of the corporate guarantee fee at 0.5% per annum for both assessment years. Additionally, certain grounds raised by the Revenue were dismissed as not relevant to the Commissioner (Appeals) order.